Huaneng Hydropower(600025) 国金证券·2024-10-30 10:20Investment Rating - The report maintains a "Buy" rating for Huaneng Hydropower, with expected earnings per share (EPS) of 0.47, 0.55, and 0.61 RMB for 2024, 2025, and 2026 respectively, corresponding to price-to-earnings (PE) ratios of 21x, 18x, and 17x [2][4]. Core Insights - Huaneng Hydropower reported a revenue of 19.42 billion RMB for the first three quarters of 2024, a year-on-year increase of 7.1%, and a net profit attributable to shareholders of 7.23 billion RMB, up 7.8% year-on-year. However, the third quarter saw a revenue decline of 1.3% and a net profit decrease of 7.4% [2]. - The company experienced a decrease in hydropower generation due to reduced water inflow in the Southwest region, with a 4.6% year-on-year drop in power generation for Q3 2024. Despite this, the company benefited from significant growth in photovoltaic installations and improved wind resources in Yunnan province [2][4]. - The average on-grid electricity price is estimated to be approximately 0.193 RMB/kWh for 2024, reflecting a year-on-year increase of about 3.7% [2]. Summary by Sections Financial Performance - For the first three quarters of 2024, Huaneng Hydropower achieved a revenue of 194.2 billion RMB and a net profit of 72.3 billion RMB, with Q3 figures showing a revenue of 75.4 billion RMB and a net profit of 30.6 billion RMB [2]. - The company forecasts net profits of 8.45 billion RMB, 9.83 billion RMB, and 10.91 billion RMB for 2024, 2025, and 2026 respectively, with corresponding EPS figures [4]. Operational Analysis - The hydropower generation for Q3 2024 was 38.5 billion kWh, down 5.6% year-on-year, attributed to a marginal decline in water inflow. However, wind and solar generation saw increases of 11.6% and 98.5% respectively [2]. - Yunnan province's electricity demand increased by 7.8% year-on-year in Q3 2024, supported by stable industrial production and rising electricity exports [2]. Taxation and Costs - The company faced an increase in income tax expenses due to the expiration of tax incentives for certain power stations, leading to a 4.8 percentage point rise in the effective tax rate [2].